SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3117-20

THE ATLANTIC CITY SUPERIOR

OFFICERS' ASSOCIATION,

Plaintiff-Appellant,

v.

CITY OF ATLANTIC CITY, 

STATE OF NEW JERSEY, NEW

JERSEY DIVISION OF LOCAL

GOVERNMENT SERVICES IN 

THE DEPARTMENT OF 

COMMUNITY AFFAIRS, 

MELANIE WALTER, Director of 

the Division of Local Government 

Services in the Department of 

Community Affairs in [her] official 

capacity,

Defendants-Respondents.

______________________________

Argued June 9, 2022 – Decided June 30, 2022

Before Judges Whipple, Geiger, and Susswein.

On appeal from the Superior Court of New Jersey, 

Law Division, Atlantic County, Docket No. 

L-3538-20.

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
2

A-3117-20

Kevin D. Jarvis argued the cause for appellant 

(O'Brien, Belland & Bushinsky, LLC, attorneys; 

Kevin D. Jarvis and David F. Watkins, Jr., on the 

briefs).

Ronald L. Israel argued the cause for respondents 

(Chiesa Shahinian & Giantomasi, PC, attorneys; 

Ronald L. Israel and Melissa F. Wernick, on the 

brief).

PER CURIAM

In this case of first impression, we are asked to determine whether the 

Municipal Stabilization and Recovery Act (MSRA), L. 2016, c. 4, allows the 

State of New Jersey to vacate an arbitration award resulting from a collective 

negotiations agreement (CNA)

1

involving a "municipality in need of 

stabilization and recovery." More specifically, we address whether the State 

can exercise this authority via N.J.S.A. 34:13A-16(j) when the CNA here was 

expired but still in force, and the accumulated sick leave compensation 

benefits allegedly vested prior to when Atlantic City (the City) was designated 

as in need of stabilization and recovery. Because the Legislature clearly 

granted the State such broad authority, intended that MSRA supersede 

1

 The record appears to use the terms "collective negotiations agreement" 

(CNA) and "collective bargaining agreement" (CBA) interchangeably. For 

clarity, we use the term "collective negotiations agreement" which conforms 

with MSRA and the Employer-Employee Relations Act, N.J.S.A. 34:13A-1 to 

-64.
3

A-3117-20

arbitration law, and instructed the courts to construe MSRA liberally given the 

State's interest in addressing municipalities' severe fiscal distress, we affirm. 

The facts are undisputed. Plaintiff Atlantic City Superior Officers'

Association (ACSOA) appeals from a May 21, 2021 order and accompanying 

memorandum dismissing its complaint against the City; the State of New 

Jersey; the New Jersey Division of Local Government Services (DLGS) in the 

Department of Community Affairs (DCA); and Melanie Walter, the DLGS 

Director (the Director) in her official capacity (collectively, the State). 

On March 14, 2013, Public Employment Relations Commission (PERC) 

Interest Arbitrator Michael J. Pecklers issued a decision and arbitration award 

setting forth certain terms of a CNA between the City and ACSOA covering 

the period from January 1, 2013 through December 31, 2015. The award 

provided, in pertinent part: 

ARTICLE XXVII SICK AND INJURED shall be 

modified to include the following language at the end 

of paragraph [two]: A cap of $15,000.00 shall apply to 

all payments for accumulated sick leave made to 

employees hired by the City of Atlantic City after 

January 1, 2013 and subsequently promoted. Any 

current employees hired before January 1, 2013 who 

are subsequently promoted will be covered by the 

language in the expired CNA.
4

A-3117-20

On September 11, 2013, the City adopted a resolution authorizing the 

mayor to execute the CNA between the City and the ACSOA, and the parties 

signed the agreement. 

On May 26, 2016, the City and the ACSOA signed a memorandum of 

agreement (MOA). The MOA provided the City may promote officers from 

Sergeant to Lieutenant or Lieutenant to Captain with no increase in pay until 

the parties and the State ratify a salary increase. The MOA did not apply to 

any other terms of the parties' CNA. 

The following day, the Legislature enacted MSRA. On June 6, 2016, 

Charles Richman, then the DCA Commissioner (the Commissioner), made a 

final determination designating the City as a "municipality in need of 

stabilization and recovery" pursuant to the MSRA. 

In July 2016, Jerry Barnhart and James Sarkos were promoted from 

Lieutenant to Captain in the Atlantic City Police Department (ACPD). Under 

the terms of the CNA then in effect:

2

Any officer promoted to the rank of Captain after July 

1, 2004, will be paid for all his/her accumulated sick 

leave as a lump sum as of the date the officer is 

promoted to Captain. The lump sum shall be 

compensated at the full rate of pay in effect for that 

2

 The CNA covering the period from 2013 through 2015 remained in effect 

because the parties had not reached a successor agreement. 
5

A-3117-20

officer as a Lieutenant on the date of the officer's 

promotion to Captain. 

The City did not pay Barnhart and Sarkos their accumulated sick leave 

as a lump sum pursuant to the payment schedule set forth in the CNA. On 

October 24, 2016, the Policemen's Benevolent Association (PBA) Local 24, 

ACSOA, and the City agreed to terms for respective successor CNAs covering 

the period of January 1, 2016 through December 31, 2018, which the parties 

memorialized and ratified, but the State did not approve. 

On November 9, 2016, the DCA Local Finance Board voted to vest 

powers under the MSRA to then-DLGS Director Cunningham (the Takeover). 

On December 19, 2016, DLGS, the City, PBA, ACSOA, and the ACPD 

Chief of Police met to discuss the State's proposed changes to the CNAs. "The 

State informed plaintiffs that unless the parties reach an agreement, it would 

unilaterally impose changes on the ACPD pursuant to [MSRA]." PBA Local 

24 v. Christie, No. ATL-L-554-17 (Law Div. May 23, 2017) (slip. op. at 12). 

On March 13, 2017, following unsuccessful negotiations to come to an 

agreement with the PBA and ACSOA, the State notified plaintiffs that a 

number of reforms would be effective March 15, 2017. The change pertinent 

to this case is the elimination of the "lump sum payment of all accumulated 

sick leave upon promotion to Captain at the rate of pay as a Lieutenant, 
6

A-3117-20

effective March 15, 2017." In total, the State's reforms were estimated to save 

the City approximately $19 to $20 million. 

On March 17, 2017, the PBA and ACSOA filed a complaint against 

then-Governor Christopher Christie, various state officials, and the City 

seeking to prevent those defendants from implementing the State's changes to 

their CNAs. 

On May 23, 2017, Judge Julio L. Mendez denied injunctive relief in part, 

and granted temporary injunctive relief in part. PBA Local 24. The court 

determined that the State's proposal to completely eliminate terminal leave

lump sum payments less than $15,000 was unreasonable, but the proposal to 

eliminate terminal leave lump sum payments in excess of $15,000 was 

reasonable and consistent with MSRA. 

As to accumulated sick leave upon retirement, Judge Mendez wrote: 

The court finds that plaintiffs cannot establish that 

they have a property right to terminal leave lump sum 

payouts. Plaintiffs present no cases to support their 

argument that the Takings Clause of the New Jersey 

Constitution applies to terminal leave payouts or even 

other rights generated by CNAs. It is important to 

highlight that plaintiffs are not losing any of their sick 

time. The proposal calls for the elimination of a lump 

sum payment of accumulated sick leave upon 

retirement. The purpose of sick leave is to give an 

employee the opportunity to continue to receive a 

salary while they are out on disability. This could 
7

A-3117-20

happen at any time. An employee who may have 300 

days accumulated may face a very serious illness and 

have to use all of their sick time before they retire. In 

this court's view, the vested right is the accumulated 

sick days, not the amount of money that those days 

represent. The proposal does not in any way impact 

the accumulated sick days. 

On June 7, 2017, the State issued an implementation memorandum

modifying the City's CNAs with the PBA and ACSOA.3 

On January 10, 2018, the PBA, ACSOA, and the City entered into a 

stipulation of dismissal with prejudice and without costs. Thereafter, the City 

and ACSOA and the PBA entered into a settlement agreement, which was filed 

with the court on January 16, 2018. The settlement agreement provided, in 

pertinent part: 

6. While the City contends that it had the right under 

the MSRA and all other applicable laws to terminate 

all terminal leave payments, and will continue to 

litigate this issue in other pending litigation, for 

purposes of settling this lawsuit, the parties agree that 

the terminal leave payouts for all police officers and 

superior officers will be a maximum of $15,000.00 at 

the time of retirement in accordance with N.J.S.A. 

11A:6-19.2.

. . . . 

9. The parties agree that the [implementation 

memorandum] dated June 7, 2017, which modified the 

3

 The memorandum is not in the record. 
8

A-3117-20

collective negotiations agreements with PBA Local 24 

and the [ACSOA] shall remain in full force and effect 

as modified by this Settlement Agreement. All terms 

contained in the [memorandum] dated June 7, 2017 as 

modified by this Settlement Agreement shall be 

incorporated into the Collective Negotiations 

Agreements between PBA Local 24 and the [ACSOA] 

including, but not limited to, that the Settlement 

Agreement is in effect through December 31, 2021 

. . . .

On May 25, 2018, arbitrator Ruth M. Moscovitch held a hearing in 

Atlantic City. The issue presented was: 

Whether the City, by failing to pay [Barnhart and 

Sarkos] their accumulated sick leave upon their 

promotions to the rank of Captain on July 1, 2016, 

violated the terms of the [CNA] between the parties, 

in light of [MSRA] signed into law on May 27, 2016, 

the June 7, 2017 [memorandum], and/or the Superior 

Court supervised settlement agreement of January 11, 

2018. If so, what shall the remedy be?

On August 21, 2018, Moscovitch entered an opinion and award ordering 

the City to pay Barnhart and Sarkos accumulated sick leave payments as of the 

dates of their promotion, July 1, 2016. The arbitrator determined that Barnhart 

was due $132,046.43 and Sarkos between $97,586.95 and $110,252.98. 

By letter dated October 18, 2018, Director Walter wrote a letter to 

Atlantic City Mayor Frank M. Gilliam, Jr., and City Council President Marty 

Small stating: 
9

A-3117-20

Following exhaustive consideration of the City's 

budgetary needs, contractual obligations, and longterm financial projections, I have concluded that the 

City's recovery has progressed sufficiently to support 

certain previously suspended terminal leave payouts 

for pre- and post-MSRA employee retirements. To 

this end, the City may now initiate terminal leave 

payments for both pre[-] and post[-]MSRA employees. 

Thereafter, on October 24, 2018, the City adopted a resolution 

authorizing payment to retired employees for their accumulated sick time 

(terminal leave). 

However, on December 7, 2018, Walter notified plaintiff's counsel and 

the arbitrator:

For the reasons provided below, I hereby exercise the 

power vested in me by the Municipal Stabilization and 

Recovery Act (MSRA), codified at N.J.S.A. 

[52:27BBBB-1] to deny approval of the arbitration 

award. In accordance with the MSRA, the arbitration 

award is not binding upon the parties to the grievance 

and has no force and effect. Accordingly, Sarkos and 

Barnhart shall not receive any payment for 

accumulated sick leave by virtue of their promotion to 

Captain on July 1, 2016. However, both parties will 

have the ability to use this accumulated leave.

Walter explained that N.J.S.A. 52:27BBBB-5(g) and (i) empowered her 

as Director "to take any steps to stabilize the finances, restructure the debts, or 

assist in the financial rehabilitation and recovery of the municipality in need of 

stabilization and recovery, including, but not limited to" unliterally modifying 
10 A-3117-20

CNAs, except those related to school districts, and "unliterally modifying 

wages, hours, or any other terms and conditions of employment" with respect 

to any expired CNA. She also explained that N.J.S.A. 34:13A-16(j) provides 

that an arbitration award will not be binding without the Director's approval. 

Thereafter, ACSOA filed a complaint against the State to confirm the 

arbitration award, alleging that the State violated the MSRA by failing to 

comply with the arbitration award. The State moved to dismiss ACSOA's 

complaint for failure to state a claim pursuant to Rule 4:6-2(e), which ACSOA 

opposed. On May 18, 2021, Judge John C. Porto conducted telephonic oral 

argument and granted the State's motion, dismissing ACSOA's complaint with 

prejudice with a thorough and well-reasoned written decision. This appeal 

followed. 

We "review[] de novo the trial court's determination of the motion to 

dismiss under Rule 4:6-2(e)," for "failure to state a claim upon which relief 

can be granted." Dimitrakopoulos v. Borrus, Goldin, Foley, Vignuolo, Hyman 

& Stahl, PC, 237 N.J. 91, 108 (2019). In considering a Rule 4:6-2(e) motion, 

the court "examines 'the legal sufficiency of the facts alleged on the face of the 

complaint,' . . . limiting its review to 'the pleadings themselves.'" Ibid. The 

test for determining the adequacy of a pleading is "whether a cause of action is 
11 A-3117-20

'suggested' by the facts." Printing Mart-Morristown v. Sharp Elecs. Corp., 116 

N.J. 739, 746 (1989) (quoting Velantzas v. Colgate-Palmolive Co., 109 N.J. 

189, 192 (1988)). Plaintiffs are entitled to every reasonable inference of fact. 

Indep. Dairy Workers Union v. Milk Drivers Local 680, 23 N.J. 85, 89 (1956). 

"If the court considers evidence beyond the pleadings in a Rule 4:6-2(e) 

motion, that motion becomes a motion for summary judgment, and the court 

applies the [summary judgment] standard of Rule 4:46." Dimitrakopoulos, 237 

N.J. at 107. We review the trial court's grant or denial of a motion for 

summary judgment de novo. Branch v. Cream-O-Land Dairy, 244 N.J. 567, 

582 (2021).

Plaintiff argues that the trial court erred in finding that the State may 

vacate any arbitration award pursuant to N.J.S.A. 34:13A-16(j) and need not 

demonstrate its decision is reasonable and consistent with "the standard 

initially set forth by Judge Mendez in the [International Association of Fire 

Fighters (IAFF)] litigation and later reaffirmed in the police union's 2017 

action." Plaintiff also argues "[the State]'s refusal to comply with their preMSRA contractual obligations is completely unreasonable and in violation of 

the MSRA and is sufficiently plead in the complaint." In sum, plaintiff argues 

N.J.S.A. 34:13A-16(j) does not apply to the arbitration award, and contrary to 
12 A-3117-20

the trial court's conclusions, the Director does not have "unlimited power" to 

vacate, reject, modify, or confirm arbitration awards. As a result, plaintiff 

contends traditional arbitration law applies, requiring the court to confirm the 

award. 

In the alternative, plaintiff argues that, if the Director may vacate 

arbitration awards, the Director may do so only prospectively as to arbitration 

awards "accruing and vested" after the November 9, 2016 Takeover. Thus, 

because Barnhart and Sarkos's accumulated sick leave "vested" on July 1, 

2016, the court was required to confirm the arbitration award. We disagree. 

Judge Porto wrote: 

There is nothing in N.J.S.A. 34:13A-16(j) to even 

suggest a limitation in its application to any 

arbitrations for contractual rights to a period after a 

municipality is placed under the MSRA's provisions. 

The [c]ourt finds the [L]egislature's use of the words 

"any arbitration award" expresses very broad, 

unequivocable terms and is not limited in application. 

While undoubtedly a municipality cannot take 

advantage of N.J.S.A. 34:13A-16(j) until after it is 

deemed a municipality in need of stabilization of 

recovery, but once a municipality is so designated, the 

[c]ourt finds the statute does not limit the Director's 

powers to only arbitrations for contractual rights 

arising after the MSRA's powers are triggered. The 

[c]ourt cannot view this legislation in a vacuum. . . . 

[T]his [c]ourt finds there is no limitation or any 

intended limitation to be placed upon the Director 

precluding him or her from exercising the power to 
13 A-3117-20

decline or approve any arbitration for contractual 

rights even those that arose and were completely 

vested prior to a takeover pursuant to MSRA. It is 

clear to this [c]ourt that the MSRA provided the 

Director with broad, comprehensive and extensive 

powers to execute a plan to achieve economic stability 

in the City. . . .

The [c]ourt finds the plain language of N.J.S.A. 

34:13A-16(j) clearly states that it is applicable to any 

arbitration award including the award at issue here. 

The [c]ourt cannot re-interpret N.J.S.A. 34:13A-16(j) 

to say the Legislature intended to limit the powers 

therein when by their chosen words clearly reflects 

unlimited powers. 

Furthermore, Plaintiff's argument that the 

common [] law permits this [c]ourt to confirm the 

Arbitration Award runs contrary to our well-settled 

principles. The Court recognizes the ability of courts 

to confirm common law arbitration continued after the 

enactment of the Arbitration Act[, N.J.S.A. 2A:24-1 to 

-11]. See Policeman's Benevolent Ass'n, Local 292 v. 

Borough of N. Haledon, 158 N.J. 392, 400-04 (1999). 

However, the MSRA serves to limit the [c]ourt's 

ability to do so in this instance. "The common law is 

the collection of judicially crafted principles—

developed in the crucible of the adversarial process—

that govern matters that do not fall within the realm 

occupied by the Legislature." Farmers Mut. Fire Ins. 

Co. of Salem v. N.J. Prop.-Liab. Ins. Guar. Ass'n, 215 

N.J. 522, 545 (2013). "Legislative enactments are 

never subservient to the common law when the two 

are in conflict with each other." Ibid. Those 

pronouncements are appropriate here.

Utilizing the common [] law to confirm an 

arbitration award in which the Director of the DLGS 
14 A-3117-20

expressly denied pursuant to the MSRA would render 

the MSRA subservient to the common law and to the 

interpretation of judges.

. . . .

This [c]ourt finds that it would run counter to these 

legislative findings to permit this court or any future 

court to use the common law to override a decision 

from the Director who was authorized to oversee 

prudent fiscal management of local governments and 

remedy the financial concerns that caused the City to 

be deemed in need of stabilization and recovery. 

Indeed, using the common law to override the express 

statutory authority to confirm and enforce the 

Arbitration Award would, in this [c]ourt's opinion, 

erode and undermine the fiscal integrity of the City 

and compromise the uniform compensation system 

that the City lacked before MSRA. The MSRA gave 

the Director of the DLGS expansive powers to 

stabilize and set municipalities, such as the City, upon 

the path of fiscal recovery. Using the common law to, 

in essence, circumvent those expansive statutory 

powers essentially renders the MSRA a nullity and 

contravenes the legislative intent. For that reason, the 

[c]ourt declines to accept the invitation to circumvent 

the delegated statutory powers.

As Judge Porto thoroughly explained, MSRA sets forth the governing 

framework in this case. The Legislature explained the rationale for enacting 

MSRA: 

a. The short and long-term fiscal stability of local 

government units is essential to the interests of the 

citizens of this State to assure the efficient and 

effective provision of necessary governmental services 
15 A-3117-20

vital to public health, safety, and welfare, including 

the fiscal health of our State's municipalities.

b. In certain extreme cases, local governments that 

experience severe fiscal distress become incapable of 

addressing the circumstances that led to that 

extraordinary distress or of developing a 

comprehensive plan for financial rehabilitation and 

recovery.

c. It is necessary and appropriate for the State to take 

action to assist local governments experiencing severe 

budget imbalances and other conditions of severe 

fiscal distress or emergency by requiring prudent 

fiscal management and operational efficiencies in the 

provision of public services. . . .

[N.J.S.A. 52:27BBBB-2.]

Section 6 of the MSRA amended the Employer-Employee Relations Act, 

N.J.S.A. 34:13A-1 to -64, and added paragraph N.J.S.A. 34:13A-16(j), which 

states: 

The Local Finance Board may provide that any 

arbitration award, including but not limited to an 

interest arbitration award, involving a municipality 

deemed a "municipality in need of stabilization and 

recovery" pursuant to section 4 of [L. 2016, c. 4, 

N.J.S.A. 52:27BBBB-4] shall be subject to the review 

and approval of the Director of the Division of Local 

Government Services in the Department of 

Community Affairs, including those on a collective 

negotiations agreement where the matter has been 

submitted to an arbitrator pursuant to law, and no such 

award shall be binding without the approval of the 

director. Nothing in this subsection shall be construed 
16 A-3117-20

to limit the scope of any general or specific powers of 

the Local Finance Board or the [D]irector set forth in 

[L. 2016, c. 4, N.J.S.A. 52:27BBBB-4].

The Legislature instructed the courts to liberally construe the MSRA "to 

give effect to its intent that severe fiscal distress in municipalities in need of 

stabilization and recovery shall be addressed and corrected." N.J.S.A. 

52:27BBBB-13. 

Our review of rulings of law and issues regarding the applicability, 

validity or interpretation of laws, statutes, or rules is de novo. In re Ridgefield 

Park Bd. of Educ., 244 N.J. 1, 17 (2020). When construing a statute, our

"paramount goal" is to discern the Legislature's intent. DiProspero v. Penn, 

183 N.J. 477, 492 (2005). We must "look first to the statute's actual language 

and ascribe to its words their ordinary meaning." Kean Fed'n of Teachers v. 

Morell, 233 N.J. 566, 583 (2018). "'[T]he best indicator of [the Legislature's] 

intent is the statutory language,' thus it is the first place we look." Richardson 

v. Bd. of Trs., PFRS, 192 N.J. 189, 195 (2007) (first alteration in original) 

(quoting DiProspero, 183 N.J. at 492). "If the plain language leads to a clear 

and unambiguous result, then our interpretive process is over." Ibid.

Here, as an initial matter, plaintiff challenges the trial court's conclusion 

that the Director has "unlimited power" to vacate arbitration awards involving 
17 A-3117-20

municipalities designated as in need of stabilization and recovery under 

MSRA. We need not reach this broad question. Rather, our narrow inquiry is 

whether the Director may vacate this arbitration award pursuant to the MSRA. 

We agree with Judge Porto that the Director may. 

N.J.S.A. 34:13A-16(j) controls over arbitration law, and a plain reading 

permits the Director to vacate the arbitration award in this case. When the 

Legislature enacted MSRA in 2016, New Jersey's public policy favoring 

arbitration was well-established. See L. 1951, c. 344, codified at N.J.S.A. 

2A:24-1 to -11; Martindale v. Sandvik, Inc., 173 N.J. 76, 85 (2002) ("[W]e

rely on the well-recognized national policy and the established State interest in 

favoring arbitration."). Indeed, our Supreme Court emphasized:

Courts have engaged in an extremely deferential 

review when a party to a collective bargaining 

agreement has sought to vacate an arbitrator's award. 

The well-established standard . . . is that "an 

arbitrator's award will be confirmed 'so long as the 

award is reasonably debatable.'" . . . . That high level 

of deference springs from the strong public policy 

favoring "the use of arbitration to resolve labormanagement disputes."

[Policemen's Benev. Ass'n v. City of Trenton, 205 N.J. 

422, 428-29 (2011) (citations omitted).]

Yet, against this backdrop, the Legislature circumscribed the State's 

public policy favoring arbitration in an effort to strike a balance with the 
18 A-3117-20

State's interest in addressing municipalities' severe fiscal distress. The plain 

language of N.J.S.A. 34:13A-16(j) permits the State to set aside any arbitration 

award: 

The Local Finance Board may provide that any 

arbitration award . . . involving a municipality deemed 

a "municipality in need of stabilization and recovery" 

. . . shall be subject to the review and approval of the 

Director of the Division of Local Government 

Services in the Department of Community Affairs, 

including those on a collective negotiations agreement 

where the matter has been submitted to an arbitrator 

pursuant to law, and no such award shall be binding 

without the approval of the director. . . .

"[L]ook[ing] first to the statute's actual language and ascrib[ing] to its 

words their ordinary meaning," Morell, 233 N.J. at 583, N.J.S.A. 34:13A-16(j) 

clearly requires the Director's approval for an arbitration award involving a 

"municipality in need of stabilization and recovery" to be valid and 

enforceable. Even if we assume for the sake of the argument that N.J.S.A. 

34:13A-16(j) is ambiguous, the Legislature instructed the courts to liberally 

construe MSRA "to give effect to its intent that severe fiscal distress in 

municipalities in need of stabilization and recovery shall be addressed and 

corrected." N.J.S.A. 52:27BBBB-13. Lest there be any doubt as to the 

Legislature's intention to grant broad, superseding authority to the State to 

protect financially distressed municipalities, it additionally directed that "[t]o 
19 A-3117-20

the extent any inconsistency exists between the terms of [L. 2016, c. 4 

(N.J.S.A. 52:27BBBB-1 et al.)] and other applicable laws, the terms of [L.

2016, c. 4 (N.J.S.A. 52:27BBBB-1 et al.)] shall prevail." N.J.S.A. 

52:27BBBB-14. Together, these provisions "lead[] to a clear and 

unambiguous result" and conclude our interpretative process. Richardson, 192 

N.J. at 195. 

Furthermore, the enactment of N.J.S.A. 34:13A-16(j) has primacy over 

case law on arbitration. "Legislative enactments are never subservient to the 

common law when the two are in conflict with each other." Farmers Mut. Fire 

Ins. Co., 215 N.J. at 545. Therefore, no other reading of N.J.S.A. 34:13A16(j) is permissible. 

Plaintiff's insistence that the State is "bound by the constraints of 

reasonableness otherwise controlling the MSRA," is unpersuasive with respect 

to the question of whether the State may vacate the arbitration award under 

N.J.S.A. 34:13A-16(j). N.J.S.A. 34:13A-16(j) plainly contains no 

reasonableness standard. Further, plaintiff inappropriately relies on PBA 

Local 24, which does not paint with such a broad brush as plaintiff asserts. 

That opinion's reasoning and conclusions regarding the reasonableness of the 

Director's authority pertains only to N.J.S.A. 52:27BBBB-5(a)(3)(g). Id. (slip 
20 A-3117-20

op. at 29-30). Thus, the issues in that case did not concern N.J.S.A. 34:13A16(j) and are therefore inapplicable here. 

Finally, that the Director modified the CNA's term on accumulated sick 

leave consistent with MSRA, the July 1, 2016 "vesting" of Barnhart and 

Sarkos's accumulated sick leave lump sum payments is inconsequential. 

MSRA permits the Director to unilaterally modify this contract term. 

N.J.S.A. 52:27BBBB-5(3)(i) applies squarely to the facts of this case. 

That provision provides: 

(3) The authorities granted to the director by the 

Local Finance Board pursuant to this section shall 

extend to any and all actions that, in the exclusive 

discretion of the director, may help stabilize the 

finances, restructure the debts, or assist in the 

financial rehabilitation and recovery of the 

municipality in need of stabilization and recovery. 

Notwithstanding the provisions of any other law, rule, 

regulation, or contract to the contrary, the director 

shall have the authority to take any steps to stabilize 

the finances, restructure the debts, or assist in the 

financial rehabilitation and recovery of the 

municipality in need of stabilization and recovery, 

including, but not limited to:

. . . . 

(i) with respect to any expired collective 

negotiations agreement to which the 

municipality in need of stabilization and 

recovery is a party, unilaterally modifying 
21 A-3117-20

wages, hours, or any other terms and conditions 

of employment. . . . 

[N.J.S.A. 52:27BBBB-5(3)(i) (2016).]

When Barnhart and Sarko were promoted on July 1, 2016, the CNA 

covering the period from January 1, 2013 through December 31, 2015 was 

expired. By letter dated December 7, 2018, the Director modified the contract 

term for a lump sum payment for accumulated sick leave upon promotion from 

Lieutenant to Captain. Specifically, the Director provided that such promoted 

officers would not receive lump sum payments, but would be able to use their 

sick leave days. The Legislature's enactment of N.J.S.A. 52:27BBBB-5(3)(i) 

contemplated precisely the circumstance here where the State may unilaterally 

modify the terms and conditions of employment in connection with an expired 

CNA. 

Applying the principles of statutory interpretation, the Legislature's 

intent by the plain language of this provision is apparent. The State may 

"unilaterally modify" any term or condition of employment where the CNA 

with a municipality in need of stabilization and recovery is expired. This 

"clear and unambiguous result" concludes our interpretative process. 

Richardson, 192 N.J. at 195. Thus, MSRA permits the Director to unliterally 
22 A-3117-20

modify the contract term for accumulated sick leave upon from Lieutenant to 

Captain as that CNA expired. 

Alternatively, N.J.S.A. 52:27BBBB-5(3)(g) may also apply to this case. 

Because the CNA covering the period from January 1, 2013 through December 

31, 2015 remained technically effective when Barnhart and Sarkos were 

promoted, the State still permissibly exercised its statutory authority to 

unilaterally modify the contract term on accumulated sick leave. 

(3) [T]he director shall have the authority to take any 

steps to stabilize the finances, restructure the debts, or 

assist in the financial rehabilitation and recovery of 

the municipality in need of stabilization and recovery, 

including, but not limited to:

. . . . 

(g) unilaterally modifying, amending, or 

terminating any collective negotiations 

agreements . . . to which the municipality is a 

party, or unilaterally modifying, amending, or 

terminating the terms and conditions of 

employment during the term of any applicable 

collective negotiations agreement, or both, 

provided that the director determines that the 

modifications, amendments, or terminations are 

reasonable and directly related to stabilizing the 

finances or assisting with the fiscal 

rehabilitation and recovery of the municipality 

in need of stabilization and recovery. . . .

[N.J.S.A. 52:27BBBB-5(3)(g) (2016).]
23 A-3117-20

We reject plaintiff's contention that the broad grant of authority to the 

State under the statutory framework violates New Jersey's Contract Clause, 

N.J. Const., Art, IV, §VII, ¶ 3. Under that Clause, the Legislature cannot pass 

"any bill of attainder, ex post facto law, or law impairing the obligation of 

contracts, or depriving a party of any remedy for enforcing a contract which 

existed when the contract was made." N.J. Const., Art. IV, § VII, ¶ 3. 

However, "[t]he prohibition against impairment of contracts under the federal 

and state constitutions is not absolute. It 'must be accommodated to the 

inherent police power of the states to safeguard the vital interests of their 

residents.'" In re Pub. Serv. Elec. & Gas Co.'s Rate Unbundling, Stranded 

Costs & Restructuring Filings, 330 N.J. Super. 65, 93 (App. Div. 2000) 

(citation omitted). 

MSRA's findings and declarations undeniably supply the justifications 

for granting the State the authority to unilaterally modify the expired-buteffective CNA. See N.J.S.A. 52:27BBBB-2. The reasonableness standard 

does apply to N.J.S.A. 52:27BBBB-5(3)(g), but plaintiffs waived this precise 

issue in relation to the arbitration award because they did not raise it before the 

trial judge. R. 2:10-2. Therefore, the Director's unilateral modification of the 
24 A-3117-20

contractual term on accumulated sick leave was permissible, whether under 

N.J.S.A. 52:27BBBB-5(3)(i) or (g). 

In the end, although no case law directly addresses whether lump sum 

payments upon promotion for accumulated sick leave constitute a vested right, 

Judge Mendez's reasoning that the vested right was the sick leave days, not the 

dollar amount, is also persuasive. The Director disapproved the arbitration 

award granting Barnhart and Sarkos lump sum payments for accumulated sick 

leave when they were promoted. But the Director permitted them to use the 

accumulated leave during their tenure. Thus, because plaintiffs retain their 

sick leave benefit, the arbitration award does not infringe on their vested 

contractual rights, if any. 

As to plaintiff's remaining arguments, we are satisfied they are without 

sufficient merit to warrant further discussion in a written opinion. R. 2:11-

3(e)(1)(E).

As a last word, although we said this was a case of first impression, we 

note the specific dispute is unlikely to be repeated because, Governor Philip D. 

Murphy signed bills A. 5590/S. 3819 in June 2021, amending the MSRA, and 

extending the monitoring period under MSRA from five years to nine years. A 

sunset provision in N.J.S.A. 34:13A-16(j), provides:
25 A-3117-20

The provisions of this subsection shall no longer be 

applicable on and after the first day of the sixth year 

next following the determination by the Commissioner 

of Community Affairs that the municipality shall be

deemed "a municipality in need of stabilization and 

recovery" pursuant to section 4 of [L. 2016, c. 4 

(N.J.S.A. 52:27BBBB-4)]; however, actions taken 

pursuant to this subsection prior to the effective date 

of [June 24, 2021] of [L. 2021, c. 124] shall be final 

and shall not be subject to reconsideration.

Affirmed.